Individual Judgment and Trust Formation: An Experimental Investigation of Online Financial Advice
38 Pages Posted: 20 Dec 2013 Last revised: 15 Sep 2014
Date Written: June 22, 2014
Using an online incentivized discrete choice experiment, we study how well individuals judge financial advice and whether factors other than advice quality influence their evaluations. We find evidence that some individuals rely on extraneous signals to judge advice quality and observe some persistency in adviser choice over time. Our results also explain how some advisers can maintain trustworthy reputations despite giving bad advice. Finally, we explore whether individuals learn throughout the experiment. Our findings have several public policy implications that are discussed in the conclusion.
Keywords: Individual judgement, Trust formation, Experimental investigation, Online, Financial advice
JEL Classification: D12, D83, G28
Suggested Citation: Suggested Citation